By Rae Wee

SINGAPORE (Reuters) - The Australian and New Zealand dollars rose on Friday as did the yuan, reacting to comments from U.S. President Donald Trump that suggested a softer stance on tariffs against China, while the yen was on guard ahead of a Bank of Japan (BOJ) rate decision.

Trump said in an interview with Fox News aired on Thursday evening that he would rather not have to use tariffs over China, adding that he thought he could reach a trade deal with the world's second-largest economy.

The Australian dollar jumped 0.4% to a five-week high of $0.6310 shortly after the comments, while the New Zealand dollar similarly gained 0.42% to peak at its highest since mid-December at $0.5700.

The two Antipodean currencies are often used as liquid proxies for the Chinese yuan.

The Chinese yuan similarly got a lift on the back of Trump's remarks, with the onshore unit rising roughly 0.3% to 7.2682 per dollar.

Its offshore counterpart was last 0.23% higher at 7.2699 per dollar.

Elsewhere, the yen was little changed at 156.18 per dollar, languishing near a one-week low hit in the previous session.

The BOJ concludes its two-day policy meeting later in the day and markets have fully priced in a 25-basis-point hike, with comments from BOJ officials in recent times also hinting at such a move.

The Japanese currency surged last week on heightened expectations for a rate hike but has since given up some of those gains as traders also await further clarity on the BOJ's policy outlook.

"The BOJ is likely to proceed with a rate hike," said Vincent Chung, co-portfolio manager for T. Rowe Price's diversified income bond strategy.

"We expect this initial rate increase in 2025 to be followed by a series of gradual hikes, potentially bringing the policy rate to 1% by the end of the year. The policy rate could even exceed 1%, as this is closer to the lower end of the BOJ's neutral rate range."

Analysts said it would take a hawkish hike from the BOJ to prevent the yen from falling anew after Friday's decision, with officials likely needing to signal further rate increases ahead.

Underscoring expectations for a rise in borrowing costs on Friday, data showed Japan's core consumer prices rose 3.0% in December from a year earlier to mark the fastest annual pace in 16 months.

DOLLAR BLIP

In the broader market, the dollar was headed for its worst weekly fall in two months, after Trump's widely expected tariff announcements did not materialise following his inauguration, unlike what he had threatened during his campaign.

The greenback was set to lose 1.4% against a basket of currencies, its steepest decline since November. The dollar index was last 0.23% lower at 107.89 on Friday.

The euro, meanwhile, rose 0.26% to $1.0443 and was headed for a 1.7% weekly gain. Sterling edged 0.21% higher to $1.2377 and was similarly poised for a rise of 1.5% for the week, snapping three straight weeks of losses.

Also adding to headwinds for the dollar were comments from Trump demanding that the Federal Reserve cut interest rates, arguing he understands monetary policy better than those charged with setting it.

"The Trump comments ... are a reminder that we're just going to have this constant source of volatility coming from off-the-cuff comments, and of course, it does on paper challenge a little bit of that Fed independence," said Rodrigo Catril, senior FX strategist at National Australia Bank.

Trump's remarks come just days before the Fed's first policy meeting to be held during his administration, with very broad expectations officials will leave rates unchanged.

In cryptocurrencies, bitcoin was last 0.26% higher at $103,359.72, while ether gained 1.88% to $3,309.79.

Trump on Thursday ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile, making good on his promise to quickly overhaul U.S. crypto policy.

(Reporting by Rae Wee; Editing by Jacqueline Wong and Shri Navaratnam)